Annual Report for Monthly Income Schemes - Tata Mutual Fund

1.3 Portfolio Valuationa Recognition, de-recognition and measurementRegular purchases and sales of investments are recognised on the trade date - i.e. the date on which the Scheme's orderof purchase or sale of investment is executed. Investments include contracts for purchase of securities and excludecontracts for sale of securities, for which deliveries are not received/collected.Investments purchased are initially recognised at cost of acquisition. Cost of acquisition includes transaction costs suchas brokerage, stamp charges and other charges customarily included in the brokers note, but excludes pre-acquisitionaccrued interest which is classified as part of "Other Current Assets".Investments are derecognised when the rights to receive cash flows from the investments have expired or the Schemehas transferred substantially all the risks and rewards of ownership.Bonus shares and rights entitlement are recognised as on the respective ex-dates on the principal stock exchange wherethe shares are traded.Subsequent to initial recognition, all investments are measured at fair values reflective of the realisable value of thesecurities / assets. Gains or losses on sale of investments are determined using the "average cost method" and arerecognised in the Revenue Account in the period in which they arise either within "Income" if it is a gain or within"Expenses and Losses" if it is a loss. Changes in the unrealised diminution in the value of investments, if any, betweentwo balance sheet dates is recognised in the Revenue Account as "Provision/(Reversal) for diminution in value ofinvestments". Changes in the unrealised appreciation in the value of investments, if any, between two balance sheetdates is disclosed under appropriation account as "Increase / (Decrease) in unrealised appreciation in the value ofinvestments". Unrealised gain in the value of investment is reduced from distributable income at the time of incomedistribution.b Fair value estimationEquity SecuritiesThe Scheme classifies its investments in equity securities as Non-Traded, Thinly Traded and Traded Securities.Non-Traded equity securities are those equity and equity related securities that have not been traded on any StockExchange for a period of thirty days prior to the valuation date.When trading in an equity and equity related security (such as convertible debentures, equity warrants, etc.) in a monthis less than Rs. 500,000 and the total volume (in all recognised Stock Exchanges) is less than 50,000 shares, the securityis classified as Thinly Traded.Equity securities that do not fall within the Non-Traded Securities or Thinly Traded Securities are classified as TradedSecurities.Traded securities are valued at the last quoted closing price on the principal stock exchange (Bombay Stock ExchangeLimited - "BSE") on which the security is traded on valuation date. When on a particular valuation day, a security hasnot been traded on the BSE; the value at which it is traded on National Stock Exchange ("NSE") is used.